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As the partial shutdown of the federal government enters its 17th day, the stakes are rising. Shutdowns have numerous negative economic and political effects, but they can be avoided through a simple mechanism, even if the government does not enact a budget.
To avoid the costs and uncertainties of future government shutdowns, Congress and the president should enact a rule that says that if appropriations bills are not passed on time, Congress would automatically fund the government at the previous year’s levels, after adjusting for inflation.
There are two types of federal spending. Mandatory programs – including Social Security and unemployment insurance – continue in operation until they are changed. By contrast, discretionary programs – such as infrastructure investment, the national parks, public health research, and international assistance – require policymakers to approve funding for a set period – typically, but not always, for a year.
But this process frequently breaks down. In most years since 2010, Congress has not even passed a budget resolution that sets overall spending and tax targets. If they cannot agree on a spending bill for the next year, the president and Congress sometimes enact a short-term “continuing resolution” (CR) to fund discretionary programs, typically at the previous year’s levels, until they can agree on new spending. If they don’t pass a spending bill or a CR, some or all of the government “shuts down,” though vital services like defense continue.
Lengthy shutdowns took place in 1995-1996, 2013, and now 2018-2019. Altogether, since 1976, there have been 21 shutdowns, ranging from one day to 21 days.
Here’s how we got to the current situation. In September 2018, Congress passed and the president signed appropriations bills for the Legislative Branch, military construction, and the Departments of Defense, Education, Energy, Health and Human Services, and Veterans Affairs.
On December 19, the Republican-controlled Senate passed a CR to fund the rest of the government (albeit only through February 8). But then President Trump said that he would not sign a bill that did not include significant border wall funding, which led to the current stalemate.
The shutdown directly affects the EPA and the Departments of Agriculture, Commerce, Justice, Homeland Security, Interior, State, Transportation, Treasury, and Housing and Urban Development. As a result, government services ranging from national parks and museums to the IRS and environmental and food inspection offices are operating with reduced staff and hundreds of thousands of federal workers are on furlough. (In previous shutdowns, workers have received pay for the time lost.)
Politically, the shutdown seems like a litmus test for everything else to come. If political leaders can’t “walk” through the mere process of keeping the government open, how can they ever hope to “run” through more complex issues?
While the political grandstanding continues, the economy will suffer. The frequent failure to ratify a budget in a timely manner breeds uncertainty about whether programs will continue and makes the operation of government more difficult.
And shutdowns are expensive: The 2013 shutdown which lasted 16 days reduced GDP by $24 billion. The confidence-sapping effect on the public was probably far larger. In a Gallup survey taken during the 2013 shutdown, 33 percent of Americans cited dissatisfaction with government and elected officials as the nation’s top issue – the highest percentage since the organization began polling in 1939 – and double the 16 percent figure when the government was open just a month before.
Moreover, the notion that much of the government should shut down because of disagreements in one tiny area of government spending defies logic and common sense. No business would operate that way. The programs without current funding cost more than $300 billion per year. By contrast, the fiscal divide between President Trump and congressional Democrats over funding for the wall is roughly $4 billion.
Finally, the shutdown – if it continues – will further reduce any belief that the two parties can get along in the Trump era. When major issues – such as fighting a potential recession, dealing with climate change, addressing the opioid crisis, or resolving immigration debates – require active policy changes, gridlock will only make things worse.
My simple proposal would not eliminate gridlock on other issues, but it would take one potential obstacle out of the way, and it would help legislators – even in times of extreme partisanship – meet their most fundamental responsibility – to keep the government open and functioning.
This blog was originally published by the Brookings Institution on January 3, 2019.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
Jose Luis Magana/AP Photo